RSSThe Consumer Financial Protection Bureau has entered into a proposed settlement with a group of corporate and individual defendants over violations of state interest rate caps and other consumer financial protection laws.
The defendants allegedly violated multiple laws in connection with short-term loans to American consumers through a network of affiliated companies located in Canada and Malta, the bureau said.
The settlement is intended to end a lawsuit initially filed by the bureau in 2015 in federal district court against 17 separate defendants.
The bureau alleged that the lenders had made payday loans to residents of states in which the loans were void under state law due to interest rates that exceeded state usury limits.
In addition, the bureau alleged that the defendants had failed to acquire the appropriate licensure in some of those states. The CFPB found that the defendants had engaged in “unfair, deceptive, or abusive acts or practices” in violation of the Consumer Financial Protection Act.
“We are taking action against the NDG Enterprise for collecting money it had no right to take from consumers,” said Richard Cordray, who was CFPB Director at the time the suit was filed. “Companies making loans within the U.S. have to comply with federal law, and the Consumer Bureau will work to ensure that American consumers receive the protections and fair treatment they deserve.”
Specifically, the defendants had misrepresented to consumers that they were obligated to pay debts that were void under state law, the bureau said. Further, they claimed to consumers that their loans were not subject to U.S. federal law or any state law. Consumers who did not pay or take other actions required of the lender were threatened with lawsuits.
The original complaint also alleged that the defendants violated the Credit Practices Rule by conditioning the loans on irrevocable wage assignments.
The proposed settlement permanently bars the defendants from engaging in “advertising, marketing, promoting, offering, originating, servicing, or collecting” consumer loans made to U.S. residents, or in “assisting others in such activities, or receiving any remuneration or other consideration from providing service to, or working in any capacity for, anyone engaged in or assisting with such activities.” They are also barred from collecting on any outstanding loans.
The proposed settlement provides for no monetary penalty against the defendants.
